Mr Brian Roy v SNC-Lavalin Australia Pty Ltd

[2013] FWC 7309

[2013] FWC 7309

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.394 - Application for unfair dismissal remedy

Mr Brian Roy
v
SNC-Lavalin Australia Pty Ltd
(U2013/7768)

SENIOR DEPUTY PRESIDENT RICHARDS BRISBANE, 30 SEPTEMBER 2013

Summary: unfair dismissal remedy - jurisdictional objection re genuine redundancy - whether redeployment to overseas position was reasonable in the circumstances - s.389(2) - tension between reasonableness of redeployment (s.389(2)) and whether redundancy exemption available for reason of “acceptable” alternative employment (s.120).

[1] Mr Brian Roy, the Applicant in this application made under s.394 of the Fair Work Act 2009 (“the Act”), performed duties as a Brisbane-based Senior Designer - Mechanical for SNC-Lavalin Australia Pty Ltd (“the Respondent”) until his dismissal for reasons of alleged redundancy on 1 March 2013. The Applicant had performed the above role with the Respondent since 28 February 2011.

[2] Given the above, the Respondent moved a jurisdictional objection to the application proceeding. That objection was based on s.389 of the Act, with the Respondent claiming that the Applicant had been subject to a “genuine redundancy” as defined in that section, and as such was not a person (in effect) who was protected from unfair dismissal for purposes of s.385(d) of the Act. If this were made out, the Applicant’s application for an unfair dismissal remedy under s.394 of the Act would not be jurisdictionally competent.

[3] Evidence and submissions were taken in respect of both the jurisdictional objection and the application for an unfair dismissal remedy. There is, of course, a significant overlap in respect of the facts relevant to the two matters.

Jurisdictional objection - s.389

[4] Section 389 of the Act provides as follows:

389 Meaning of genuine redundancy

(1) A person’s dismissal was a case of genuine redundancy if:

(a) the person’s employer no longer required the person’s job to be performed by anyone because of changes in the operational requirements of the employer’s enterprise; and

(b) the employer has complied with any obligation in a modern award or enterprise agreement that applied to the employment to consult about the redundancy.

(2) A person’s dismissal was not a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within:

(a) the employer’s enterprise; or

(b) the enterprise of an associated entity of the employer.

[5] The Respondent’s case was developed principally through the evidence of Ms Diana Hawkins, the Respondent’s Human Resources Advisor; Mr Douglas Luscombe, Vice President Business Development Asia Pacific; Mr John Taylor, who had previously held the position Design Manager with the Respondent; and Mr Philip Young, Human Resources Manager Asia Pacific.

[6] The Respondent experienced a significant market downturn across its Australian and international operations in 2012 and initiated a review of its operations in August 2012 as a consequence. Mr Luscombe provided evidence about the market conditions and how he became aware of the developments through his understanding of budget forecasting and revenue streams.

[7] The Respondent argues that the Applicant was underutilised since December 2012 when the (West African) project on which he was working was completed, and there were no new projects in the Respondent’s Australian operations to which he could be allocated and no vacancies on any existing projects. Ms Hawkins had added that “no significant work was obtained or commenced in the Respondent’s Australian operations from the start of the review [August 2012] to the Applicant’s eventual redundancy on 1 March 2013.”

[8] This was the evidence, in effect, of Mr Luscombe, Mr Taylor and Ms Hawkins. It provides an important further insight into the market conditions and the labour requirements that the Respondent faced at the time of the review.

[9] By September 2012 the utilisation of the Brisbane office had fallen to a five year low and a demobilisation plan was issued mid that month.

[10] The Applicant was advised in October 2012, along with other employees, that the Respondent’s workflow had decreased and that a reduction in costs would be necessary.

[11] Meetings were held with Brisbane staff on 14 December 2012, 23 January 2013 and 12 February 2013. Redundancies were said by Mr Luscombe, who presented at the meetings, to have been discussed at each of these meetings.

[12] Between August 2012 and March 2013, the Respondent’s Brisbane office decreased its staffing count from 156 to 71 employees.

[13] As at November 2012, the Respondent contends that it had some 4 employees whom it engaged in Senior Designer - Mechanical roles. Two of these were said to be contractors and two were employees. One of the employees was the Applicant. Another was a person who departed voluntarily in November 2012 on an unpaid career break to perform services with another employer (and with no guarantee of re-employment).

[14] Between February and March 2013 the Respondent made all the Senior Designer - Mechanical roles redundant. The order of dismissal was based on the volume of billable work and the due dates for deliverables. In effect, the order of dismissal was determined by commercial considerations, not individual merit. The various positions ceased in a staggered manner across a three week or so period of time.

[15] The position of Senior Designer - Mechanical, is not currently filled by any person in the Brisbane office. A more junior position continues to be performed by a permanent employee who was promoted into that role.

[16] The principal point of dispute between the Applicant and the Respondent is whether or not the Respondent met the requirement of s.389(2) of the Act.

[17] The Applicant contends that the Respondent did not take the requisite steps to explore the viability of redeployment within the Company structure.

[18] The Applicant contends that he met with Ms Annelies Long on 27 February 2013. Ms Long is no longer an employee of the Respondent as her position was made redundant from the Brisbane office in June 2013. Though she swore an affidavit for these proceedings she was unable to attend as she was abroad at the time of the hearing. The Applicant claims that Ms Long had indicated to him that there were “plenty” of jobs in Toronto, Canada.

[19] The Applicant contends that a number of positions advertised by the Respondent “as a group” were positions for which he was qualified. He is of the view that there were a number of externally and internally advertised positions to which he could have been redeployed. One of these roles was as a CADD Designer. This position was located in Marlborough, Massachusetts in the USA and was said to be an urgent requirement which gave preference to local candidates. Another position was a CAD Technologist. This position was based in Calgary, Canada. Local candidates were again preferred for this position. A further position as a Project Leader, Mechanical and Piping, was located in New Caledonia (and required a proficiency in the French language - both written and spoken - as a pre-requisite). Another position was identified by the Applicant as a Systems CADD Technician/Designer. This position was based in Toronto, Canada. The Applicant also highlighted a further position based in Toronto as an Engineering Assistant. The position required a college diploma. The Applicant has no diploma or degree level qualification.

[20] There may be other positions that were available internationally for which the Applicant believed himself to be capable of filling.

[21] Ms Hawkins stated that Ms Long had informed her that the situation in Canada was quite the opposite from that which the Applicant claims Ms Long had described to him. Ms Hawkins possessed her independent knowledge that there had been a downturn in work in the Canadian office and redundancies were being made. Ms Hawkins had also seen minutes of the Global M&M Monthly HR Conference Call (dated 28 March 2013) which had showed over 600 employees had been made redundant from the Toronto Office.

[22] Mr Luscombe’s evidence was along the same lines, broadly.

[23] Ms Hawkins was also confident that Ms Long had raised the prospect of redundancies in Australia with overseas HR Offices in the hope they may seek to re-employ Australian staff. She was confident of this because she had seen the minutes of the Global M&M Monthly HR Conference Call for 9 November 2012. These minutes, Ms Hawkins claimed, recorded that redundancies were occurring in the Australian office, and that HR managers should first contact the Australian office to see if a redundant employee could be re-employed. I have no reason at all to disbelieve Ms Hawkins’ evidence, which was given in a professional and dispassionate manner.

Consideration

[24] The evidence as led by the Respondent demonstrates that the Respondent no longer had a position of Senior Designer – Mechanical in its Brisbane office that it wished to fill.

[25] All four of the positions have been made redundant.

[26] The circumstances affecting the Company’s operations were stark and the downsizing of its staffing levels in a period of some six months had led to more than a 50% reduction in the headcount.

[27] On the evidence available to me there can be no dispute that the Applicant’s position as Senior Designer - Mechanical was made redundant for the purposes of s.389(1)(a) of the Act.

[28] The Applicant’s position is not one that is covered by a Modern Award or an enterprise agreement and as such no obligation to consult in the context of such instruments arises. There was no contest on this front between the parties. Mr Luscombe’s evidence did demonstrate, nonetheless, that there had been a series of meetings with employees about the demobilisation and the pending redundancies. This was not contested by the Applicant. No issue arises in respect of s.389(1)(b) of the Act as a consequence.

[29] The Respondent also is required, by way of s.389(2)(a) and (b) of the Act, to seek the redeployment of an otherwise redundant employee to the extent that it is reasonable in the circumstances. What are the circumstances?

[30] There were no further Brisbane-based positions into which the Applicant could have been redeployed. It matters not that a more junior employee continued to perform a role as a Designer - Mechanical. That was not a position into which the Applicant could have been redeployed at the expense of the employment of its incumbent. That is, the position as Designer - Mechanical was not a vacant position into which the Applicant could have been redeployed (without displacing the incumbent or circumventing his promotion).

[31] The wider evidence on the part of various witnesses for the Respondent (Messrs Taylor and Luscombe and Ms Hawkins), as set out above, was to the effect that there was no new Australian work or contracts and there were no vacancies on existing projects.

[32] I think the evidence as referred to above is insufficient to meet the exclusionary statutory test of s.389(2) of the Act. That test means the Applicant’s dismissal was not a case of genuine redundancy (assuming satisfaction of s.389(1)(a) and (b) of the Act) if it would have been reasonable in all the circumstances for the Applicant to have been redeployed within the employer’s enterprise or an associated entity of the employer.

[33] It is not incumbent upon the Respondent in these particular evidentiary circumstances to attest in terms of greater particularity than it has. It is a reasonable inference to draw from the evidence that there were no other positions locally (Australia-wide) into which the Applicant could have been redeployed. If there had been evidence that the downturn had been less pronounced or severe, or patchy or uneven or just plain questionable, more may have been required. Or if the genuineness of the witnesses’ claims had fallen into question, more particularity might have been anticipated. But the evidence I have heard was genuine and dispassionately given, informed on a sound basis, and it was cross-corroborated by the various witnesses’ perspectives into and across the business.

[34] On the evidence before me, therefore, it would not have been reasonable in the circumstances for the employer to take steps to redeploy the Applicant. Plainly, the market conditions made efforts to redeploy the Applicant (beyond those as described) an improbability, if not a futile procedural gesture.

[35] That said, the Applicant pressed that it would have been reasonable in the circumstances to redeploy him, who (had) held a position in Brisbane, to an international position in an associated entity of the employer.

[36] The Applicant’s case seemed for the most part to focus on this expectation exclusively. That is, the Applicant claims that as he was of the belief that there were positions available within the company in international locations, the Company should have taken steps to redeploy him to those positions. And because they did not do so, the Applicant claims the Respondent has failed to make out the (effective) exclusionary requirement under s.389(2) of the Act, and his application must therefore be taken to be jurisdictionally competent.

[37] But there is no basis for a claim that it would have been reasonable in the circumstances for the Respondent to have redeployed the Applicant to an international location. I have said as much earlier in respect of the labour market conditions. But there are further reasons as well.

[38] Firstly, the Respondent has never held out that it has a facility to redeploy redundant employees to international locations (even if any such appropriate positions were identified). There can be no reasonable expectation on the part of the Applicant that this was the case.

[39] Mr Young gave uncontested, detailed evidence of the ad hoc arrangements whereby an employee who was made redundant might identify and apply for a position overseas, meet the stated requirements, resign their position with their local employer (and not be paid redundancy pay), and then relocate entirely at their own expense. But such outcomes are not established practices, and the Respondent might at best assist informally in facilitating applications and so forth, but little more. This is not a redeployment process.

[40] Redeployments (proper) by employers also ordinarily incur significant relocation expenses on the part of the employer. An employer would be obliged to consider the financial burden of relocation arising from redeployment to an international position (or even one interstate) for the purposes of s.389(2) of the Act. Such circumstances would inform the reasonableness of redeployment.

[41] Other difficulties arise in respect of overseas entities within a company group where those entities operate their own distinct human resource functions, policies and procedures, and there is no overriding central managerial control. This was the evidence of Mr Young in respect of the current circumstances. Ms Hawkins gave evidence that such overseas business units are focused on their own local recruitment, in any event.

[42] The Full Bench in Ulan Coal Mines Limited v Honeysett and others 1 has suggested that issues such as whether there is central management control over associated entities by a single member of the Company group will be relevant to whether an employee should apply for the available position rather than be redeployed to the position.

[43] Generally, it is not reasonable in the circumstances for the Respondent to redeploy the Applicant to an overseas location to take up a new position in such circumstances.

[44] There are a number of difficulties that arise in respect of the interaction between the discretionary notion of the reasonableness of redeployment (commonly seen as a substitute for the payment of redundancy pay and dismissal) under s.389 with the jurisdiction in relation to varying redundancy pay obligations (under s.120 of the Act).

[45] The Commission has established a line of authority through various Full Bench decisions over a lengthy period of time (from Clothing and Allied Trades Union of Australia v Hot Tuna Pty Ltd 2 and Derole Nominees Pty Ltd and the ACM)3 regarding what is and is not acceptable alternative employment (or currently “other acceptable employment”) for the purposes of exempting an employer from the obligation to pay redundancy pay, or modifying the obligation.

[46] The test established by the Commission as to whether alternative employment is acceptable is an objective one, relying on comparisons of like terms and conditions, similarity of wage escalations, seniority, job security, career pathways, preservation of service entitlements, inconveniences, distance from residence or location, health and safety risks, the effect on family responsibilities, along with other factors further. 4 I note that a failure to redeploy an employee to a lower paying job sought by the employee, however, has been found by a recent Full Bench to constitute a failure on the part of an employer to redeploy the employee for the purposes of s.389(2) of the Act.5

[47] That said, further difficult issues would arise where the “redeployment” (if it could be so defined) were to a position where foreign country terms and conditions of employment apply (which may also affect employment security etc). Other factors as cited above would also be relevant to the objective determination of the acceptability of the alternative work for the purposes of s.120 of the Act, in any event.

[48] Other issues arise in relation to international redeployments concerning whether the contract of employment (or the employment relationship) could survive such a putative redeployment. Decisions made under s.120 of the Act are often understood to be a proxy for such findings.

Conclusion

[49] The Applicant’s dismissal therefore was a case of genuine redundancy for the purposes of s.389 of the Act. Further, his dismissal is not excluded from being a genuine redundancy for reason that it would have been reasonable in the circumstances to redeploy him (in the manner stipulated at s.389(2)(a) and (b) of the Act).

SENIOR DEPUTY PRESIDENT

Appearances:

Mr L. Cudmore, for the Applicant.

Mr R. Young, HR Manager, for the Respondent.

Hearing details:

Brisbane

2013

20 September

 1   [2010] FWAFB 7578 at PN35.

 2 (1988) 27 IR 226.

 3 (1990) 140 IR 123 onwards.

 4   See for example [2007] AIRCFB 1016.

 5   [2011] FWAFB 9137. See also [2010] FWAFB 7578.

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